NEW YORK TMK
Ipsco, the North American subsidiary of Russian pipe and tube
maker OAO TMK, expects some importers to rein in shipments
toward year-end from nine countries targeted in a recent
anti-dumping case on oil country tubular goods (OCTG).
"Well see a
behavior change coming later in the year, towards the fourth
quarter, as those countries who manage their own imports
through trading companies will continue to probably bring
product. But those importers of record who are privately owned
companies (and are) taking the risk of any bonds or duties that
need to be posted will likely begin to withdraw," senior vice
president and chief commercial officer Scott Barnes said during
TMKs second-quarter conference call.
have started to show some concern about possible supply channel
disruptions from the case, according to Barnes, with the
expectation that they will "swing more towards a higher mix of
domestic production as we get closer to year-end and the
Department of Commerce investigations continue," Barnes
Commerce has until
Dec. 9 to make its preliminary decision in the cases unless
extensions are granted (amm.com, Aug. 16).
Ipsco has seen a continued shift toward more program business
in OCTG, with about three-quarters of the companys sales
of the product now coming from longer-term agreements with
end-users, TMK Ipsco chairman Piotr Galitzine said.
"Weve seen a
dramatic shift in our business to an increase in program
business, and this program business is getting much longer. A
program of a year or two is not uncommon now, where a year or
two ago a program of six months was considered a long (one),"
he said during the call.
TMK Ipsco has already
entered into some supply agreements lasting three years, with
one even lasting five years, Barnes added.
End-users are moving
to longer agreements due to increased standardization of
drilling activities and the increased negotiating leverage they
derive from placing large-volume orders, he said.
performance of TMKs Americas division, meanwhile, was
impacted by weak pricing in the second quarter even as
imports and building of inventories have caused continued
downward pressure on prices," Galitzine said.
Revenue in the
Americas division declined 7.8 percent to $413 million in the
second quarter from $448 million in the same period a year ago.
Adjusted earnings before interest, taxes, depreciation and
amortization (Ebitda) fell 51.5 percent to $33 million from $68
million, even as shipments rose 7.6 percent to 255,000 tonnes
from 237,000 tonnes in the same comparison.
The fall in sales
prices hasnt been offset by lower raw materials prices,
but Ipsco believes rising hot-rolled coil tags have peaked.
"This run-up has
plateaued, and we expect hot-rolled coil prices to come down in
September and continue to trend down as we dont see any
major drivers that would support a long-term price hike,"